General Motors Company is an American multinational corporation. It designs, builds and sells cars, trucks and automobile parts. The company also provides automotive financing services through General Motors Financial Company, Inc.

General Motors Co. emerged from the bankruptcy of General Motors Corp. (old GM) in July 2009. GM has eight brands and operates under three segments: GM North America, GM International, and GM Financial. The United States now has four brands instead of eight. The company remains the market leader in the U.S. with 17.4% share in 2017. GM Financial became the company's captive finance arm in October 2010 via the purchase of AmeriCredit.

Guru Investment Theses on General Motors Co

David Herro Comments on General Motors - Jan 09, 2019

Financial industry holdings, such as Lloyds, impaired portfolio return in 2018, and the consumer durables industry, including automobile manufacturers, was another that meaningfully detracted. We continue to believe that the automotive sector is attractively priced and that its business fundamentals are far outperforming share price outcomes. GM (NYSE:GM) is the Fund’s fifth-largest holding, which we purchased long before the company’s late 2016 acquisition of Cruise Automation, its autonomous vehicle unit. In May, Softbank announced a $2.25 billion investment in Cruise to obtain an approximately 20% interest in that subsidiary. Given that GM had only paid $1 billion for this business, the implied increase in value in less than two years was nothing less than extraordinary. But Softbank was not the last to make such an investment. In October, Honda Motor also made an investment in Cruise at a price that implied an even larger valuation of the subsidiary: $14.6 billion. This value exceeds 20% of the total market value of GM, and all this for a business that has yet to produce revenues or earnings. GM now trades around the price as when it went public in 2010 ($33). Since then, the company has cumulatively earned more than $33 per share and paid out nearly $7 per share in dividends. Additionally, management has simplified the product lineup, exited poorly performing international markets and reduced the company’s excess assembly capacity. Critics of the stock will point to economic cycle maturity, tariffs and the long-term threat from autonomous vehicles and ride-sharing. We think these concerns are overstated. By our estimate, nearly 75% of the company’s earnings come from pickup trucks and large sport utility vehicles where GM has a dominant and protected competitive moat. We believe this segment is worth more than the current stock price even before giving credit for Cruise or the company’s valuable China business. Selling at a very modest multiple of 2019 earnings and offering an attractive and well-supported dividend yield, GM remains a particularly compelling investment opportunity, in our view.We recognize that uncertainties surrounding Brexit could create a softer economic environment. To analyze this risk, we have factored in various adverse scenarios to gauge the potential effects on Lloyds’ earnings and its capital, and as a result, we believe that the company will be able to navigate any short-term headwinds because of its strong earnings generation, conservative underwriting and large excess capital position. We estimate conservatively that Lloyds is trading at 5-6x reported 2020 earnings and approximately 0.8x its 2020 tangible book value. This is a highly discounted valuation for a best-in-class financial institution.

David Einhorn Comments on General Motors Company - May 17, 2017

While it was quiet on the portfolio front, we made more noise than usual (and more than we’d like) by making public our idea for General Motors Company (NYSE:GM) to unlock tens of billions of dollars of shareholder value. As a general matter, we prefer to avoid public activism. The last time we did this was with AAPL in 2013 after owning the stock for three years. This is a similar situation; we had owned GM shares for years before advancing our idea to management.

When we offer companies private advice, they either take it, or they explain why they are not going to take it. Usually if they reject the idea, we understand the reasoning and prefer not to press the issue. Sometimes, we agree to disagree, and then decide whether to hold the stock or exit the position.

In the case of GM, we felt the need to press the issue as we believe there is a lot of value to unlock and the company did not fairly evaluate our idea. Management made a decision and then spent a great deal of effort coming up with reasons to justify that decision. To poison our idea, management went so far as to misrepresent our proposal to the credit rating agencies, allowing them to claim that the company’s credit standing would be in jeopardy if it implemented our idea. Ironically, our idea was designed to be credit positive and the least invasive way to unlock billions of dollars of shareholder value. This sort of behavior by management leaves us no room to agree to disagree.

We know this is a tough fight. Fortunately, the math is on our side (if GM does what we suggest, we believe the stock will go up a lot) and the ultimate decision will be made by our fellow shareholders. We believe others recognize that the stock is deeply undervalued and when shareholders grasp the math and the extent of GM’s behavior, they will vote with their wallets and for needed change at the Board level.

U.S. auto sales for February, which came out on Friday, plunged year-over-year owing to low demand for SUVs. In fact, new vehicle sales failed to meet expectations. Factors that adversely impacted the month’s sales report also included rising vehicle prices and interest rates, costs associated with import tariffs and cold weather. Read more...

On Wednesday, General Motors (NYSE:GM) announced its results for the fourth quarter of the company’s fiscal year 2018. This was the first quarterly report to come out of the Detroit-based automaker since CEO Mary Barra announced a sweeping restructuring effort, promising to lay off 15% of GM’s workforce, close five manufacturing plants and discontinue the production of six sedan models. Read more...

In an earlier piece, we explored what free cash flow really is, and looked at Bruce Berkowitz (Trades, Portfolio)’s advice for calculating it in the real world. Today, let's dive into what Berkowitz has to say about using dividends as signals of broader company value. Read more...

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